Direct Power Purchase Agreement Template for England and Wales

A Direct Power Purchase Agreement (DPPA) is a contract that allows you to buy renewable electricity directly from a generator, creating a direct relationship between your organization and the energy producer. Under England and Wales law, these agreements enable you to secure long-term renewable energy supplies while supporting new green energy projects and meeting your corporate sustainability commitments.

When do you need this document?

You need a DPPA when your organization wants to purchase renewable electricity directly from a generator rather than through traditional utility suppliers. This arrangement is particularly valuable for large energy users seeking price certainty, corporate buyers with ambitious sustainability targets, or organizations required to meet renewable energy obligations under UK climate legislation. DPPAs are commonly used by manufacturing companies, data centers, retail chains, and public sector organizations looking to demonstrate environmental leadership while potentially reducing long-term energy costs. The direct relationship also provides greater transparency over the source and environmental attributes of your electricity consumption.

Key legal considerations

Several critical legal elements require careful attention in your DPPA. The pricing mechanism must clearly define how electricity prices are calculated, including any indexation to market rates or inflation adjustments over the contract term. Delivery obligations need precise specification of the electricity volumes, delivery points, and consequences of under or over-delivery by either party. Green certificate provisions must address the transfer of Renewable Energy Guarantees of Origin (REGOs) and compliance with the Renewables Obligation scheme. Risk allocation clauses should cover force majeure events, grid connection issues, planning permission delays, and technology performance risks. Payment and invoicing terms must align with industry settlement periods, while termination provisions should address early termination scenarios, step-in rights for lenders, and asset transfer mechanisms.

Legal requirements in England and Wales

Your DPPA must comply with the electricity licensing framework under the Electricity Act 1989, ensuring the generator holds appropriate generation licenses and the buyer has necessary supply arrangements. The agreement must align with OFGEM regulations governing electricity market participation and settlement procedures. If the project receives government support, compliance with Contracts for Difference terms or Feed-in Tariff regulations is essential. Environmental obligations under the Climate Change Act 2008 and renewable energy targets may impact contract terms. Grid connection requirements must satisfy National Grid ESO technical standards and connection agreements. The contract should also address data protection requirements under UK GDPR for energy consumption data sharing and consider planning law implications if the agreement includes development rights or land use provisions.